QATAR’S FIRST ISLAMIC BANK

Qatar 2019 | FINANCE | VIP INTERVIEW

TBY talks to Bassel Gamal, Group CEO of Qatar Islamic Bank (QIB), on winning awards, Qatar's banking culture, and international ratings agencies.

QIB has received for the six-consecutive year the “Islamic Bank of the Year-Qatar" award by The Banker, part of the Financial Times Group. What does this recognition reflect?

Being awarded the “Best Islamic Bank of the Year" from The Banker for the sixth-consecutive year reflects the efforts and hard work of every single individual working for Qatar Islamic Bank. This continual success is a result of the support of our Board of Directors and the focused implementation of our business strategy. There are many other factors that have led to this recognition; QIB's major contribution to Qatar's financial sector, the government's commitment to diversify the local economy and develop a strong private sector, QIB's leadership stand in the provision of Sharia Compliant banking services, and the commitment and dedication of our teams to each one of our customers. Due to these factors QIB has doubled in size in the past five years. Our assets that were worth QAR73.2 billion in 2012 reached QAR150 billion by end-2017 and as a result, we are now holding approximately 12% of the total banking assets in Qatar, making us Qatar's second largest bank. During the same period, we have also outperformed the market in terms of profitability growth, having grown with a CAGR of 14.1% for the last five years. This growth trajectory continues into 2018 as we have announced a strong 13.8% net profit growth as of June 2018. At the same time, we are closely managing the ratio of non-performing financing assets to total financing assets, which at 1.2% in 2017, were one of the lowest in the industry. Such initiatives reflect the quality of the bank's financing assets portfolio and its effective risk management framework. Furthermore, the award reflects our leadership position in terms of Sharia compliant banking; QIB the first and largest Islamic bank in Qatar with a current market share of 42.3% in Islamic assets.

How is QIB working to increase banking culture in Qatar?

QIB is constantly evolving and promoting Qatar's banking culture. During the last few years, we have introduced banking propositions specifically designed to address the financial needs of untapped or underserved market segments. I am referring to the introduction of Aamaly, our SME value proposition, which offers a comprehensive bundle of products and services tailored to the needs of this segment of companies, depending on their size, life cycle, and area of business activity. Furthermore, we have introduced an online Wages Protection System (WPS), meaning that our corporate customers have an easy, fully automated, and efficient way to pay monthly salaries to their entire workforce. Equally important, our banking package for women is offering dedicated channels of service, personalized attention, and customized offers. We have also introduced products supporting parents to secure their child's financial future, such as the “Walady" education plan, which is a long-term savings and investment plan coupled with Takaful protection for the parent, and a “Children Saving account." Furthermore, we have recently signed an exclusive agreement with INJAZ Qatar, a leading non-profit organization focused on youth economic empowerment, to sponsor and co-run a three-year financial literacy program for high schools and universities in Qatar. The program, entitled “How Money Works," is a five-hours training with interactive and engaging sessions tailored specifically for high school students and university freshmen. The first course will be delivered in October, and we will offer the program to 1,250 university and high school students over the next three years. To achieve this, we have identified a large pool of QIB expert staff who is committed and excited to deliver.

How does QIB work to attract both Sharia compliant sensitive customers and conventional customers?

Today, we are at a stage where we compete with all banks across all segments. As is the case with the majority of Islamic banks, during the last years we have been simplifying our processes, introducing new innovative products, and offering competitive pricing. I can say with confidence that our offering today is at least at par, if not better in specific areas, to any of our competitors. Those changes are coupled with highly educated and competent employees who are there to serve and offer advice to our customers. A key reason for attracting new customers, even ones that have not used an Islamic bank previously, is the significant progress we have achieved in the past couple of years regarding digital and technological advancements. We are constantly investing on this front, as we have realized that the Qatari market and our customers' expectations, following the global trend, are being driven by technological advancements. As a result, we enhanced our online presence by introducing a new mobile banking application which offers enhanced functionality, easy to use screens, and simple navigation, eliminating the need for our customers to visit a branch for the vast majority of their financial needs.

How do you expect the market share of Islamic Banking to develop in Qatar's banking sector?

Islamic banking is a growing sector in Qatar. QIB, being the first Islamic bank in Qatar, has shown impressive growth and progress over the years. Over the past decade, the regulatory authorities have enacted several changes to further improve governance standards in Islamic financial services. From their side, Islamic banks in Qatar have recorded significant achievements. Recent investments and focus on innovation, technology, and people have allowed us to introduce advanced products, efficient processes, and competitive pricing. As a result, the current share of Islamic banking assets in the local banking sector accounts for quarter of the total banking assets, while the share of deposits is 26% (as of June 2018). Based on that Qatar's Islamic banking sector will keep on playing a vital role in the future. Going forward, the operating environment in Qatar is supportive to continued growth for the banking sector with the real GDP growth forecast for 2018 one of the highest in the region. Qatar's economy has been enriched with different investors taking interest in the country due to 2022 World Cup and a number of billion-dollar mega projects related to the National Vision 2030. The economic diversification, strengthening foreign investments, and upgrade of Qatar's financial capabilities are key factors pointing to further domestic business growth and opportunities for all banks in Qatar.

Fitch Ratings has upgraded QIB outlook to “Stable." What have been the contributing factors to this decision?

International financial credit rating agencies such as Fitch and Moody's have upgraded ratings of Qatari financial institutions and changed their outlook from negative to stable as an act of reassurance to global investor's growing confidence in Qatar's economy. Moody's recently affirmed QIB's deposit ratings to A1 with a “stable" outlook, Fitch affirmed QIB at 'A' with a stable outlook, S&P affirmed the bank's credit rating at 'A-', and CI affirmed QIB's Financial Strength Rating (FSR) at 'A'. These ratings reflect QIB's strong and well-established franchise in Qatar. As per the analysis of the rating agencies, the upgrades factor our adequate profitability, sound asset-quality metrics, satisfactory capital ratios and sufficient liquid assets.